Owning a home is one of the best investments you can make with your hard-earned cash. But the property also requires constant repair and maintenance. On occasion, maintenance issues can be big and end up costing you thousands of dollars for the simple reason that your home insurance doesn’t cover a whole lot.
For instance, if your HVAC system goes down, or your roof has sprung a thousand leaks and you need to replace it, you might find yourself having to shell thousands of dollars out of pocket. It’s for this reason looking into a reputable home warranty company might be one of the best financial moves you can make.
A home warranty costs only a few dollars per month. But it can save you thousands when something like your air conditioner or refrigerator breaks down as a result of everyday wear and tear. Home warranties can also assist with offsetting the cost of replacing or repairing your existing AC system when it malfunctions.
But home warranties aside, the past year has not been good for home sales. Not only have mortgage rates doubled post-pandemic, but so have home prices. Sellers are holding onto their houses longer, hoping to snag that perfect bid. However, in recent weeks, some mortgage rates have dipped just enough for buyers to become interested again.
According to a new article by The New York Times, in the early days of the pandemic when lots of urban dwellers were making the exodus from cities like New York to work in remote, far-off locations, other folks decided to move closer to their families. Some of the people set their sight on buying a new home, but when the mortgage rates and prices spikes, they put their plans on indefinite hold.
One potential buyer who pulled up stakes to move all the way from the west coast to the east coast, claims she spent the majority of 2022 learning the ins and outs of mortgages. Undiscouraged by the rate spike, the Amazon public relations executive was looking forward to closing on a $975,000 Crown Heights one-bedroom apartment at the end of the year. In a word, she felt that the time was right to pull the trigger.
But had she waited just a month or two later, she would have realized as better deal. According to CNN, while new home prices spiked in 2022, in January of 2023 they started to come down as mortgage rates began to ease from their late 2022 highs.
Sales of newly constructed home were said to be up 7.2 percent from January to December of 2022, but dropped almost 20 percent from 2021, or so claims the U.S. Census Bureau and U.S. Department of Housing and Urban Development. But January 2023’s month-over-month gain once again jumped by over 7 percent which suggests that not only is the housing market potentially stabilizing, but the new buyers are finally coming back to the negotiating table.
Says CNN, sales of brand new single-family homes were at a seasonally adjusted annual rate of 670,000 in January 2023. This is said to up from the revised 625,000 in December of 2022. However, sales were down from 2021’s 831,000. But January’s homes sales have been the strongest since March of last year.
Mortgage rates topped at 7 percent in November of 2022, but in January they eased somewhat. But make no mistake, rates have once more pivoted and are said to be trending up based not only on continuing inflation fears in part due to Washington DC’s financial support of the Ukraine/Russian war, and the prospect of recession (Google and Amazon layoffs have been significant, for instance).
One bright spot for potential home buyers is that the prices of new homes have dropped in December. They are also said to have fallen for the first time since August 2020. This means the median price for a new home has fallen to around $427,500 in January 2023, which is down from $465,600 in December 2022. The price is 0.7 percent lower than that of the $430,500 median price of one year ago. But make no mistake, these numbers are still so elevated, that most millennials and Gen Zers are priced out of the market, effectively denying them the American Dream.
But says an economist for the Navy Federal Credit Union, new home sales are dropping precipitously in January 2023 to the lowest median price since the first quarter of 2022. Sales still remain depressed from what they were one year ago however. But this shows that another dip in price in the housing market should theoretically benefit homebuyers. This will be especially true if mortgage rates continue to drop. But with CPI once more ticking up in February, the Fed is likely to put off plans to ease rates for the foreseeable future.